<div id="readability-page-1"><div><div><div><div><p>It is the Christmas quiz question that will haunt City analysts. What is the least likely stock to have rivalled Nvidia, the multi-trillion-dollar company that dominates the market for the powerful chips that underpin generative AI, over the past five years?</p><p>A clue: the animal depicted in its trademark product has the worst possible connotations when it comes to global commodity exchanges.</p><p>Yes, the humble teddy bear is behind one of the biggest stock market success stories of recent times: Build-A-Bear Workshop, a company that started life in 1997 in St Louis, Missouri, selling nothing more sophisticated than stuffed toys.</p></div></div><div><div><p>For most of this year, shares in Build-A-Bear, which is known by its BBW ticker symbol on the New York Stock Exchange (NYSE), have outperformed even those in Nvidia, the Silicon Valley giant driving potentially the most transformational technology since the Industrial Revolution.</p><p>On a five-year basis, the returns have been even higher, peaking in September at more than 1,800 per cent for BBW investors, compared with around 1,200 per cent for investors in Nvidia, with stock buybacks having helped to boost BBW shareholder returns.</p><p>“We are talking about one of the best-performing stocks in the world, full stop,” says Nelson Cheung, a portfolio manager at Montreal-based Formula Growth, who has held BBW shares for the past four years.</p></div></div><div><div><p>With plaudits like that, Build-A-<em>Bull </em>might be more apposite, although the closest bovine I could find on the company’s website to the one associated with soaring share prices was a cuddly Highland Cow with optional extras of a tartan hat-and-scarf set and a happy birthday sash.</p><p>In the age of the touchscreen, toy retailers and manufacturers are not known for being hot investments. Stock in US giants Mattel and Hasbro has shown slow growth, or even decline, over the past five years, while in the UK, The Entertainer, Britain’s biggest toy shop chain, made a £10m pre-tax loss in the 12 months to February 2025, compared with a £6m profit the previous year. And Toys R Us is only now slinking back to some British high streets after it went bankrupt in 2018, blaming online competition from Amazon and children’s obsession with iPads.</p><p>Stuffed toys, though, have one great advantage over tech: touchscreens are lousy to snuggle up with in bed. But when it comes to the multicoloured world of plushies, the family-owned British company Jellycat is all-conquering, as I witnessed on a recent Sunday afternoon trip to Selfridges on London’s Oxford Street.</p></div></div><div><div><p>The corner devoted to Jellycat’s vast world of huggable palm trees, baguettes and giant, smiling moons was packed. Across the floor, German brand Steiff’s selection of traditional bears – in 1902 they were the first to be named Teddy (after US president Theodore Roosevelt) – was being plundered for its upmarket offerings, which include a delightful Snoopy and Woodstock.</p><p>Then there are Labubus, the faddy zoomorphic elf-life creatures spawned by China’s Pop Mart (listed on the Hong Kong Stock Exchange), which sparked global memes this summer. Rare editions costing up to £2,500 have been seen swinging from designer handbags, but the standard version also sells in Selfridges.</p><p>On the day I visited, only the Build-A-Bear area was quiet. Not everyone is a fan, clearly. One friend was particularly sniffy, dismissing the US brand as “one of those awful shops where rich kids have parties. I wasn’t impressed”. If my own children and their peers are anything to go by, Build-A-Bear teddies don’t have the viral allure of some of their rivals.</p><p>So how did BBW, which trades from more than 650 stores in 32 countries, become a Wall Street-conquering moneymaker?</p><p>It’s a fascinating tale that pits big money against small toys. Or, as Sharon Price John, BBW’s 61-year-old chief executive, tells me: “It’s a really interesting story about bias.” She adds: “People – analysts, investors – like to invest in things that they know and understand. I’ve had many a conversation with an analyst at some of those big conferences, the majority of them in their late 20s and early 30s, [all] young men who can’t understand why anyone would want a teddy bear. Or many teddy bears.”</p></div></div><div><div><p>To the uninitiated, Build-A-Bear Workshop is ostensibly a retailer, often to be found tucked away in the far reaches of a shopping mall, such as the stores in St David’s Dewi Sant in Cardiff, or Meadowhall in Sheffield – just two of 42 outlets dotted around the UK and Ireland. A beaming yellow bear face stares out from the company logo, beckoning children in with their adults, and adults <em>without</em> any children, the latter being increasingly important to the company’s bottom line.</p><p>Inside, customers – or “guests”, as they are known – can pick from a variety of plushies, which come in all shapes, sizes and animal species, from bears and cats to capybaras and axolotls. There are Harry Potter bears, Bluey dogs, Pokémon characters, <em>Wicked </em>Glinda and Elphaba bears, Hello Kitty and her pals, Baby Yoda, and more.</p><p>Some are regular stuffed plushies, but most of the products are what can only be described as “skins”: animal carcasses ready to stuff, to order, which is the crucial point of difference between Build-A-Bear and other soft toy sellers.</p><p>Shoppers can also select from a staggering array of outfits in which to dress their new cuddly friends, from Christmas-themed dresses and Grinch pyjamas to blue hospital scrubs and Gryffindor gowns.</p><h2>The beating heart of experiential retail</h2><p>In any Build-A-Bear store, the main event will always be the “workshop” itself: a machine that resembles a giant popcorn maker, white fluffy stuffing spinning gently around, ready to be sucked down a small nozzle into whichever “skin” the recipient has chosen. Each plushie also gets a heart to insert inside the toy – for an additional fee you can opt for one that actually pulses – plus the option to add a short recorded message via a small voice box or one of a range of scents.</p><p>The original idea, as dreamt up by Maxine Clark, the chain’s Florida-born founder, was to turn buying a soft toy into a creative experience that would warrant a special family outing to a mall. “It was ahead of its time with experiential retail,” says Matthew Carlone of Minneapolis-based investors Thrivent Asset Management, which owns around 7 per cent of BBW. “At its heart, Build-A-Bear is inherently customised and personalised; each experience is unique to the consumer. We really like it from that perspective.”</p></div></div><div><div><p>I put this to the test on a wet and dark December afternoon by taking my 11-year-old daughter to the chain’s Oxford Street branch, which is coming up to its one-year anniversary. In Build-A-Bear world, birthdays mean you can pay your age for a special bear – a canny marketing trick that keeps customers coming back.</p><p>It is a first ever visit for both of us, something duty manager Charlotte Hughes seems to find difficult to fathom. (I can’t explain why we’ve never been before beyond the fact that I once bought my three children a stuffed lion, cheetah and tiger, respectively, from FAO Schwarz in New York, and felt they would suffice.)</p><p>Today, my daughter has free rein to pick anything she likes, settling on a “Timeless Teddy”, the most basic option and, at £25, the store’s bestseller. She opts for a gingham fabric heart but not what she describes as the “creepy” beating option (£6). Nor a “scent” from a choice that includes bubblegum or lavender (£3.50). She also declines my offer to record a message on a tiny voice box but regrets the omission once we are home. I’m sure we can return for some post-purchase surgery – all the plushies have stitching in their backs that can be easily unpicked. Some red tartan pyjamas (£14.50) finish the look. It’s surprisingly fun and we find ourselves planning to send her oldest brother off to university with one next year, complete with a message.</p><p>“You got the classic pyjamas! Adorable! Love it. You’re raising her right,” is Price John’s verdict when I show her over a video call the following day.</p><h2>Navigating the pandemic</h2><p>The story of how the Build-A-Bear business grew into a financial behemoth essentially begins 12 years ago, when shockwaves from the recent recession, combined with the growth of e-commerce, were hitting stodgy bricks-and-mortar chains hard. Malls were closing and sales were falling at Build-A-Bear, tipping the company into the red.</p><p>Enter Price John, a Tennessee native, who joined in June 2013 from the children’s shoe company Stride Rite (then known as Collective Brands), where she had reignited sales. Her previous roles included positions at Hasbro, where she had been in charge of brands such as My Little Pony and Transformers, and Mattel, home to Barbie.</p><p>Price John, who replaced Clark, set about closing unprofitable stores in tired malls and leveraging the brand by moving into different sorts of retail spaces, from tourist hot spots, to other destinations where families go for fun, such as theme parks and cruise ships. Every new Carnival Cruise ship has a Build-A-Bear store. She calls this a change of tactic not strategy, adding: “The strategy was always to be where people and families go for fun and entertainment. That just happened to be malls in [the late 1990s and early 2000s].”</p><p>Carlone says: “The pivot was to be more than just a mall-based retailer, really [to] leverage the brand and go more towards hospitality and tourism and things of that nature, where people are spending money on experiences.”</p><p>Price John also embarked on creating content out of the company’s own characters: <em>Glisten and the Merry Mission </em>was a 2023 Christmas movie based on the Build-A-Bear reindeer, Glisten, while the animated series <em>Kabu </em>is based on BBW characters. These days, the company is an “experience-based, multi-generational intellectual property company that just happens to be in [some] malls”, she adds.</p><p>But it took another financial collapse to get here: the pandemic. The global shutdown of 2020 hit Build-A-Bear just when Price John’s initiatives were starting to pay off. The share price collapsed to barely more than a dollar a share as investors wrote off retailers, especially ones whose entire selling point revolved around in-store visits. Revenues crashed by a quarter, pushing the company into a net loss of almost $25m for that financial year.</p></div></div><div><div><p>“Wall Street had decided the toy industry was finished [and] Build-A-Bear was an anachronism,” says Richard De Lisle, who runs De Lisle Partners, which specialises in US equity investments, from his base in Poole, Dorset. “Wall Street thought it was a toy company; we didn’t,” he adds, explaining his decision to pile into the stock in December 2020. “We were the only institution on the planet that did have it. I’m showing off, Susie!”</p><p>De Lisle’s faith was twofold. First, he applied the Benjamin Graham principle of investing, paraphrasing how the pioneering American financier – and the author of 1949 classic <em>The Intelligent Investor</em> – picked stocks. “If you can close the doors on a company and liquidate its assets, and get more than the share price back, then it should be a good investment.”</p><p>He says the asset backing was there with Build-A-Bear. “It had no debt and stores would reopen, eventually. For about 100 million bucks, which was the market cap [the value of the listed company], you got a brand which, remarkably, was a top 10 in the world, recognised for the impact it has on childhood.”</p><p>Second, De Lisle felt the pandemic would prompt people to prioritise experiences over overt consumption. (He also invested in a company that benefited from another post-lockdown trend: for tattooing and piercings, he tells me.) Five years ago, De Lisle paid $4.90 per BBW share. On December 10, they closed at $52.85 on the NYSE, valuing the company at almost $700m (£523m).</p><h2>‘A turnaround-to-growth story’</h2><p>One pandemic twist was that Build-A-Bear wound up benefiting from the great mall shutdown. It renegotiated its existing leases for lower rent, moved to some more upmarket spots, such as the giant Mall of America in Bloomington, Minnesota, and also changed the type of stores it opened, shrinking many right down. Its estate now includes a mix of corporate-owned stores and those operated by partners, such as the US indoor water resort park operator Great Wolf Lodge. More partner locations (it has 168) will drive international growth, boosting margins and return on invested capital, say analysts. “It’s capital light and low risk,” adds Carlone.</p><p>“This is a very, very different business from the one that people remember from pre-2020,” says Cheung. “This is a turnaround-to-growth story. They’ve really been able to rebuild the brand, broaden their customer base, upgrade their product innovation, and push hard in e-commerce. So now they’re able to consistently generate sales and margin growth across many different verticals: kids, adults, gifting, and also IP [intellectual property] partnerships.”</p><p>In early December, BBW posted the strongest set of financial results in its history. Pre-tax income for the nine months to November 1 was $45.7m, up 15.2 per cent on the same period the previous year, on $375.3m of revenues, an 8.5 per cent increase. Those figures included a $5m hit from US tariffs on Chinese imports and other related costs. BBW relies on Chinese-made goods for around 60 per cent of its merchandise, but is switching production to Vietnam to offset the impact of the US-China trade war. Full-year sales are expected to “break the half-a-billion-dollar revenue mark for the first time in the history of the organisation”, says Price John.</p></div></div><div><div><p>Back in London, I visit Build-A-Bear’s South Bank store, which is nestled between the London Dungeon and Shrek’s Adventure, where I watch Ann, a 25-year-old Dutch tourist, pick out a cream jumper with a Union Jack image for her champagne-coloured teddy. She’s visiting London with her twin sister and her mother; all three have bought bears. “It’s a present to myself from my trip to England,” Ann tells me.</p><p>The trio’s purchases show that Price John’s strategy of chasing tourists and nostalgic “kidults” (a term coined in the 1950s by TV companies to describe adults who enjoyed programmes intended for children) is paying off. Sales to those aged 16 and above, who buy plushies for anniversaries, weddings and milestone birthdays, comprise 40 per cent of the company’s bottom line, a figure that has doubled in the past decade. Price John puts the growth down to getting the right licences – to movies and TV shows such as <em>Deadpool</em>, <em>Friends, The Matrix</em> and <em>Stranger Things</em> – and improving the website. What it calls “gifts for adults and unexpected collabs” can be found online via The Bear Cave: think teddy T-shirts that say, “I proper fancy you” and “It’s wine o’clock somewhere”, as well as more risqué outfits.</p><p>Those Dutch tourists are also crucial to the company’s international growth strategy. If and when it decides to open stores in the Netherlands, local shoppers will already know the brand from trips to London and “heart ceremony” videos shared via social media. “People know about Build-A-Bear before we get there at this juncture,” says Price John.</p><p>But growing the brand hasn’t always gone smoothly. In February 2024, BBW was taken to court by the Warren Buffett-backed owner of Squishmallows over claims its new line, Skoosherz, looked too similar to the existing egg-shaped cushion animal characters already on the market. (The two companies ended their legal dispute last August.) BBW’s latest push into a wholesale product is its Mini Beans range, tiny versions of existing products from its Spring Green Frog to Pawlette Bunny. “The risk is maybe we fail, but we believe our brand is strong enough that people would prefer a Build-A-Bear small plush to someone else’s,” says Price John.</p><p>As retailers go, Build-A-Bear is lower risk than many, partly because it has carved out a sizeable niche – “There are some tiny copycats but nobody at scale,” says Price John – and partly due to the nature of what it sells. “So much of their inventory is fungible because it’s stuffing, which is common among all plush toys. It’s the skins of the bears, and the hearts, and the scents, and the voice boxes you put in: these are common across every single product, which really reduces their risk,” says Carlone. In addition, few online shoppers return what they order, a rarity in retail, making its e-commerce arm as profitable as the rest of the business.</p></div></div><div><div><p>That said, no investment is risk free. As even Price John points out: “We are a discretionary product. There are pure macro economic risks. Our earnings were down because of tariffs in Q3. And no one likes a company with lower earnings.” True enough, the shares slipped slightly on the news, but have since recovered.</p><p>What everyone wants to know now is can it keep growing? On basic financial metrics, BBW stock is not expensive. Its price-to-earnings, or P/E, ratio (calculated by dividing the share price by the earnings per share) is around 12. The average is around 20-25. Low P/E ratios either mean companies have low growth prospects or are undervalued, neither of which appears to apply to Build-A-Bear. One anomaly is BBW doesn’t have any direct quoted peers, making it hard to value.</p></div></div><div><div><p>“I can’t really think of a company that actually compares to them. It is in a category of one,” says Cheung. At a store level, it is more similar to a casual food operator such as Chipotle or Starbucks, than a toy company such as Hasbro or Mattel, which are both wholesalers not retailers. “We find it’s still under covered [by analysts], so investors are still discovering this company,” he adds.</p><p>Price John plays it cool when I ask how it feels to outperform even Nvidia. “As a CEO, you’re like, ‘Wow, that’s a fun trivia question.’ But we’re going to stay focused on the continued delivery of shareholder value in all forms. The hard part is to recognise that it’s not just about what happened yesterday, right? Even if we become the Wall Street darling for a day, and then maybe not the next day. What we’re doing has value, and that’s where long-term returns come from.”</p><p>If it keeps posting record profits, maybe it should plan to add that bull plushie after all.</p></div></div></div></div></div>

<p>Build-A-Bear Workshop (BBW) has outperformed tech giant Nvidia in stock returns over the past five years, peaking at over 1,800% compared to Nvidia's 1,200%. Despite being a toy retailer, BBW's shares have surged, driven by stock buybacks and a unique market appeal. The company, led by CEO Sharon Price John, operates over 650 stores in 32 countries and has become a significant player on Wall Street.</p>

The soft toy company knocking the stuffing out of Silicon Valley